Accounting for the Divergence Between Privatisation Theory and Practice in Developing Countries: The Case of the Water Sector in Ghana

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Author

Robertson, Simon

Attention

2299/6058

Abstract

The performance and operation of privatisation in the water sector in developing
countries typically diverges from that proposed within the rationalising
theoretical framework. There is a broad literature that considers the various
aspects of such performance and operation, from the nature of outcomes
typically characterised by dispute and renegotiation, to the implications for
consumers. It is the purpose of this thesis to analyse the underlying factors that
contribute to this typical dispute and renegotiation process, utilising the
theoretical rationale for the programme, and its associated weakness and
assumptions, as an explanatory framework. Through this analysis it is possible
to expose and identify the particular aspects of private sector participation
(PSP), the contracts established and administration thereof, which contribute to
such problematic implementation. The utilisation of such a framework further
permits the identification of likely implications for the functioning of PSP where
implemented prospectively. The examination of these connections is performed
in a case study environment, with privatisation of water services in Ghana
providing the context. The Ghanaian experience shows significant deficiencies in
contract design that entail considerable delays and disputes between parties,
with contractual deficiencies intensifying the already inevitable role of
institutional intervention. Conceptions of water as a merit good and human
right, problematic commercial viability, and an incoherent implementation with
local contextual variation all further contribute to the contradictory environment
of the water sector in Ghana. Theoretical weaknesses, inconsistencies and
problematic assumptions are manifest in the sector and contribute to divergence
in performance, and where ideological commitment to the programme is evident,
this divergence is exaggerated. Theoretical validity for sector policy is therefore
questionable, with consequences of increased distortion in risk transfer,
significant concessions to the private sector, and the increased role of
institutions. This process, it is proposed, threatens the functioning of the
programme where implemented, with regulation undermined, inherent and
acknowledged renegotiation and dispute, paralleled by a failure to provide
sufficient capacity and structure to sector institutions.